Finnish Forest Industry Exports Forecast to Grow in 2018

As a result of increased capacity, Finnish pulp exports will continue to grow in 2017 and 2018. The rise in capacity is due especially to the Metsä Group Äänekoski bioproduct mill that became operational in August.

Nov. 6, 2017 – In a recent industry forecast, Pellervo Economic Research PTT says production figures for Finland's forest sector will clearly be impacted by new investments in both 2017 and 2018. Growth will be particularly strong in 2018 in pulp exports when the Äänekoski pulp factory begins operating at full capacity. Exports of paperboard will also increase due to investments made earlier in the year.

The demand and export of the forest sector's key export article, paper, will continue to decline both years. Exports in sawn goods will continue to grow thanks to strong demand in China. The demand for wood products will be supported by increasing construction in Finland and Europe.

The production and exports of paper in Finland will fall by 3-4 percent in 2017 and by 2-4 percent the following year. The reason for the decline is the demand for printing and writing paper, which has been diminishing for many years. There remains still an oversupply of paper, and the average export price in Finland is expected to go down during the forecast period.

In spite of the decline in production, paper will continue to account for about 35 percent of export earnings of the Finnish forest industries during the forecast period. The production volume of paperboard will rise in 2017-2018. Thanks to earlier investments, the increase in 2017 in particular will be considerable at 5-6 percent. The average price of paperboard will also see a slight increase.

Pulp export volume will rise to new heights

Thanks to increased capacity, Finnish pulp exports will continue to grow in 2017 and 2018. The rise in capacity is due especially to the Metsä Group Äänekoski plant that became operational in August. The extension of the UPM Kymi plant will also push up exports. Finnish exports will grow 4-5 percent in 2017 and 15-17 percent in 2018.

Thanks to the growth in exports, the overall volume of pulp production in Finland will see strong growth of 5-6 percent next year. Due to increased supply and the strengthening of the euro against the dollar, the price of Finnish exports will decline markedly next year.

Strong growth in sawn goods exports will continue

The volume of sawn goods exports to China will grow markedly this year as well. Exports will also be supported by increasing construction in important European markets.

An estimated 76 percent or more of the volume of sawmill production will be exported this year and the next, although domestic demand has strengthened. Production will grow 5-6 percent in 2017 and 3-5 percent in 2018. The profitability of the sawmill industry will remain low due to the strengthening of the euro against the dollar and the price development of wood raw material.

The price of sawn goods is expected to turn into a slight rise towards the end of the year and in 2018. The export of plywood will rebound after the decline of 2016, but the average price is expected to go down a little.